The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

Multiple Choice

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy:
∙ marginal propensity to consume (mpc) = 0.75
∙ net tax rate (t) = 0.20
∙ no foreign trade
∙ fixed price level
∙ all expenditure and income figures are in billions of dollars. FIGURE 22-2
-Refer to Figure 22-2.What is the value of the multiplier in this economy?

A) 1.33
B) 1.67
C) 2.0
D) 2.5
E) 6.67